President Obama has revoked a Chinese company's purchase of four wind farm projects in Oregon, which are located in the vicinity of a U.S. naval facility's restricted airspace.
Obama, acting on a recommendation from the Committee on Foreign Investment in the United States (CFIUS), issued an order prohibiting the acquisition and ownership of the wind farms by the Ralls Corp., and directed the company to divest the interest it acquired in the farms this year.
Ralls is owned by Dawei Duan and Jialiang Wu, executives at Chinese manufacturer Sany Group. According to Ralls, the company's primary business purpose is to develop wind energy products for wind turbines manufactured by Sany.
In his decision, Obama said, ‘There is credible evidence that leads me to believe that Ralls Corporation, the Sany Group, a Chinese company affiliated with Ralls; Dawei Duan and Jialing Wu might take action that threatens to impair the national security of the United States.’
The wind farm sites are located near restricted airspace at a naval weapons training facility, located near Boardman, Ore. The facility is used to test remotely piloted drones and electronic warfare aircraft that accompany American bombers on missions.
In the past, the U.S. Department of Defense has stated wind turbines can negatively impact several areas of defense operations, such as border surveillance, flight training and military readiness. In addition, clusters of wind turbines look similar to storm activity on weather radar, making it harder for air traffic controllers to convey information to pilots.
The Ralls complaint alleges that early this year, Ralls bought four small Oregon companies whose assets consisted of wind farm development rights, land rights to construct wind farms, power purchase agreements and government permits.
The projects – which collectively would total 40 MW of capacity – had received other federal regulatory approvals, such as a determination by the Federal Aviation Administration that the turbine towers presented no hazard to aviation.
On Sept. 18, Ralls Corp filed a lawsuit against CFIUS for ordering it to stop all construction and operations at its project sites. Meanwhile, CFIUS meanwhile completed its investigation and finalized its recommendation to Obama.
While it is not unusual for CFIUS to interject itself in foreign investment, the president's directive is notable because it is the first in 22 years where a U.S. president has blocked a direct foreign investment, according to Joshua Zive, senior counsel at Bracewell Giuliani.
After the decision was announced on Friday, the company said it was confident that the courts would vindicate Ralls Corp's rights under the law and the Constitution.
However, some industry watchers, such as Bracewell's Zive, say such a reversal will be difficult to achieve.
‘It's a national security decision and one that CFIUS and the president have weighed in on,’ Zive adds, concluding that it will be extremely difficult for a court to disagree with both CFIUS and the president and overturn the ruling.